How to avoid family philanthropy conflicts

On National Philanthropy Day it’s important to revisit some of the important questions and concerns a family business should address when contemplating family philanthropy or a family foundation.

Family foundations make up over half of all private foundations, according to the Foundation Center, but family business owners who want to take that step into philanthropy should keep a few things in mind.

Asking whether or not to stay together in the family foundation can feel like an act of betrayal, says Debbie Bing, a principal at CFAR, a management consulting firm specializing in strategy and organizational development.

How can siblings, cousins or other family members openly explore whether they want to keep working together without damaging relationships and calling into question the shared purpose on which their philanthropic activities have been based?

At the same time, not asking the question can be damaging too, as concerns go underground, eroding connectedness as a family and effectiveness as a philanthropic organization. It feels like a real predicament—and it is. What to do?

While every family has unique circumstances and needs, there are ways to get unstuck that can work, Bing says, regardless of the particulars:

1. Before going too far, commit to exploring interests. Create a timetable for exploring issues fully, so participants understand that decisions needn't be made in one meeting. Design a series of meetings that allow people to explore assumptions, beliefs, aspirations and concerns. Think about who should be included, and where and when to have these conversations. (Location can make a real difference.)

2. Clarify the decision-making process: when and how an affirmative decision will be made about whether to continue philanthropic efforts together as a family. This will help keep your conversations on track.

3. Make good use of a trusted family member or outside adviser who is particularly skilled both interpersonally and in the ways of philanthropy. This person should serve as a connector rather than a divider. He or she can help keep the foundation on track, ask questions, set norms and help say out loud what is too hard for others to say themselves. Often, a trusted adviser can also bring structure to the conversations — through a tool or method—to move the conversation from one that feels "hot" and personal to one that is both personal and solvable.

4. Bring to the surface underlying issues that are behind any given choice. Usually, family members' differing views on specific issues are worth unpacking. These can include program commitments, rules about the involvement of spouses, beliefs about whether and how the next generation can get involved, spend rates and more. Identify the issues fueling family members' beliefs and understand where each person stands on each of these issues, rather than just focusing on where everyone stands on the ultimate stay/split decision. This will clarify what needs to be addressed with any choice.

5. Explore alternative futures. Create narratives or scenarios (written from the future) that play out the multiple choices and feel "real" in that they illustrate a path to deal with the issues of concern. For example, create a detailed story about what the foundation will look like five years from now — working back to the present — if the board radically changes the giving strategy or changes the approach to family involvement on the board. What do you foresee as the turning points and trade-offs? Each scenario should offer a different view of the future, and should fill in the details of the choices involved in that narrative to give family members a concrete way to imagine alternatives. Be creative and think of many alternatives. There are many ways to split or to stay together. A foundation may stay together but dramatically increase the amount of funding that is "trustee-directed" to allow for individual interests to be pursued under the same overarching umbrella. Or, the family may decide to create multiple legal entities but jointly fund a legacy program that embodies shared history and commitment at an agreed-upon level.

6. In all of this, explicitly set out to discover the basis for the family’s connection. How does philanthropy fit, and what other ways to foster connectedness might be added or used instead?

7. Make a decision. While it can be tempting to leave decisions in limbo indefinitely, this non-choice actually further erodes the things that are most critical to philanthropic families: impact, relationships and an ability to feel powerfully engaged.

(Experts will be on hand to discuss family philanthropy when Family Business hosts the Generational Wealth conference Feb. 7-9 in Coral Gables, Fla. And don’t miss the January/February issue of Family Business Magazine, which will offer in-depth coverage of philanthropy.)